ZoneBitcoin EditorialCryptocurrency can be a liberating force
Bondo is a scattered group of villages in a remote region of Malawi, near the border with Mozambique. It is located at the foot of Mount Mulanje, where locals rely on their feet to get around and a few crops to feed their families. Yet unlike most places in this poor country, when night falls they can now turn on the lights, stoves and televisions in their homes.
There is electricity in Bondo. Three turbines have been installed in a mini hydroelectric project exploiting the region's rainfall. This installation has changed the lives of 1 households so far connected to a mini-grid. Children can study after dark and are now more likely to pass secondary school exams without having to leave school at the age of 800. Medicines and food can be stored in refrigerators, so villagers do not have to travel the 11 miles to school or to the hospital. They can also produce batches of food or drinks to sell at the market. Preparing an evening meal is three times faster – and much less destructive to the environment – without the need to collect firewood.
A group of women laughed when I asked them if they had a television to watch football games at home. “Before, our husbands said they were going to watch football when in reality they were going out with other women. Now they can’t pretend they’re going to play football,” Bertha told me. The main chief told me it was a dream to have power for the villages, with a dozen corn mills, many small businesses, schools, shops and churches also were able to connect to the network.
“When you move around Bondo, you see happy people – and that’s thanks to electricity.”
But Bondo's big surprise is not simply the energy supply of such an isolated community, in a country where only one in eight citizens has access to the electricity grid and on a continent where almost half of 1,2 billion people still do not have this life-changing energy.
The real eye-opener is the warehouse containing 32 computers inside the concrete pump shed. This innovative mini-grid – located more than two hours from Blantyre – Malawi’s second city – along bumpy roads and tracks that can become impassable in torrential rain – mines Bitcoin to finance its operation.
It's a smart idea. The specific computers used to validate transactions and create new Bitcoin consume roughly the same amount of energy as that generated by a mid-sized country like Sweden. Hence the scathing criticism of the way in which this cryptocurrency wastes the planet's precious resources.
This initiative in Bondo reverses this discourse by showing that bitcoin mining makes it possible to finance energy in regions of Africa that are too poor or too remote to benefit from it even though they have abundant potential energy sources. Bitcoin mining then makes it possible to absorb excess energy from these renewable energy plants. And this not only provides electricity, but also a powerful boost to stimulate the development of the local economy.
The concept comes from a company based in Kenya, Gridless, created in 2022, which counts among its supporters Twitter founder Jack Dorsey. There are four other sites in Kenya and Zambia and dozens more are planned across the continent. The company shows how Africa could play a central role in this activity by overturning the conventional belief that Bitcoin, now 15 years old, is used simply for speculation and dubious transactions.
Instead, Gridless' efforts show that bitcoin can lead to more inclusive financial systems by escaping the control of dysfunctional governments and central banks that manipulate monetary issuance.
Bitcoin will also be able to free the community from dependence on foreign aid to survive. The Bondo power stations were built by Mount Mulanje Conservation Trust, a local organization that tries to protect the unique biodiversity of the mountain region. This was initially supported by funding from aid and development agencies – but Bitcoin now covers the costs of its operation.
This provides a commercial incentive that does not rely on altruism or subsidies to provide electricity to remote regions, while exploiting excess energy produced during periods of low consumption, such as at night.
Malawi, one of the poorest countries in the world, constitutes a striking example of the failure of international aid. As the former Minister of Development said Rory stewart At a conference at Yale, Britain gave £4,5 billion over half a century to the southern African country riddled with corruption and bad governance, but it found itself "more poorer than he was at the beginning.
“Bitcoin can prevent Bondo from becoming the kind of white elephant you see all over Africa, built by aid groups only to be abandoned,” said Erik Hersman, CEO of Gridless. He admits that he is “not a big fan” of the development aid sector.
“They come in with low-cost loans and grants to finance all these projects that they say will pay off in 30 years, but the amounts never add up. Bitcoin then constitutes a new way of financing development.
Malawi also demonstrates another reason why there is growing interest in Bitcoin in Africa: people are looking for more stability for their savings than local currencies are. Prices rose sharply after the currency was devalued, rising 44% against the US dollar – the second drop in the value of the local currency (kwacha) in 18 months. Many African countries on the continent have also suffered from catastrophic inflation, while official currency conversion rates can be significantly lower than the prevailing rates.
A Kenyan entrepreneur told me she turned to cryptocurrency after seeing her savings dwindle drastically, even in a country where inflation was lower than the continent's average. “I was trying to save to buy a house, but my savings kept losing value. I wanted more stability, so I tried Bitcoin, then discovered it had other uses,” said Marcel Lorraine, the founder of Bitcoin DADA.
Among his clients is an alternative health products trader who sells in a Nairobi street market. He uses bitcoin because it is cheaper for him to use than having to change currency to negotiate with his Nigerian supplier. He now hopes this will allow him to expand his business to make it easier to obtain alternative health products.
While Warren Buffet declared Bitcoin to be “rat poison” and economist Paul Krugman compared it to a scam Ponzi Fueled by libertarian fantasies and “technological chatter,” followers see it as a liberating force due to the decentralized design created by its mysterious and creative pseudonym, Satoshi Nakamoto. BlackRock, the world's largest asset manager, even requested the creation of an exchange-traded fund (Bitcoin ETFs) which could open the market to the American wealth management sector.
Certainly, Bitcoin, despite its volatility, may seem relatively reliable if you live in Africa – or even in many other parts of the planet, fromArgentina in Lebanon. "That's what I saw everywhere," said Peter McCormack, who travels the world for his podcast on Bitcoin (Editor's note: "What Bitcoin did").
“It’s an alternative to gold and real estate for a middle class that has some money and patience, but sees its expenses and costs rise while savings lose value. And a strong middle class helps build a strong economy by boosting consumer spending, reducing reliance on government, and spurring innovation and entrepreneurship.”
Bitcoin has also become a useful tool for activists and journalists living in dictatorships because it makes tracking funds much more difficult. In Togo, a West African state ruled by a despotic family since 1967, it is used to funnel money to opposition and civil society leaders despite bank accounts being frozen. Bitcoin has been instrumental in channeling donations to Alexei Navalny's Anti-Corruption Foundation in Russia and pro-democracy movements in Belarus and Myanmar.
Alex Gladstein, director of strategy Human Rights Foundation and author claims that Bitcoin offers freedom from archaic monetary systems and political conflicts. He believes that cryptocurrency is particularly interesting for Africans because they are experiencing “all kinds of financial repression.” He points out that there are 45 currencies on the continent – 15 of which are still controlled by France – with high transaction fees on conversion transactions that are largely handled by Western companies with widely varying rates.
“Bitcoin offers an escape and an alternative for Africans, even if its use is less limited than some people think,” he says. “Entrepreneurs have figured out how people without internet can use Bitcoin, which is frankly remarkable.”
This agility is typical of the technological innovation exploding across Africa, driven by a young, rapidly growing and increasingly educated population. “The great thing about Bitcoin is that it is a bottom-up technology and there is real adoption across the board,” said a key figure at the the second edition of Africa Bitcoin Conference which took place in Ghana late last year.
Only time will tell whether Satoshi's invention will prove to be a bubble with harmful consequences or, as optimists believe, a driver of profound changes in the world. The fraud conviction of Sam Bankman-Fried, who ran one of the world's largest cryptocurrency exchanges, and the admission of money laundering by the boss of another major exchange have damaged the reputation of cryptocurrencies for many people in the West.
But Bitcoin certainly appears to offer something positive in societies marked by autocracy, colonialism, military coups and poor governance – as shown by these computers in a concrete shed in rural Malawi that are transforming the water into flow of money to finance electricity.
Read the article in its original version here.
The author of this article, Ian Birrell is an award-winning journalist and columnist. He is also the founder, with Damon Albarn, of the musical collective "Africa Express".
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